China's Renren first-quarter loss narrows

OwenFletcher

(Adds background on company and China Internet stocks in 2nd paragraph, CEO's comments on revenue and user growth in 3rd paragraph, CEO's comments in interview about acquisitions and overseas expansion in 4th-5th paragraphs, executive's comment on group-buying site partners in 10th paragraph, background on Renren's competition in 11th paragraph.)

BEIJING (MarketWatch) -- Renren Inc. (RENN) said Tuesday its first-quarter net loss narrowed because of a leap in revenue and relief from warrant write-downs in the year-earlier period, as the Chinese social-networking company reported its first results as a U.S.-listed company.

May's initial public offering by Renren, often called China's Facebook Inc., was one of a series by Chinese Internet companies in recent months. Many of those IPOs drew strong investor demand, but concerns about a possible bubble in the stocks have pulled down share prices in recent weeks, as shares of U.S.-listed Chinese companies have also slumped due to concerns about possible accounting issues.

"We have achieved solid revenue growth in the first quarter," Renren Chairman and Chief Executive Joseph Chen said on a teleconference about the results. Renren is likely to exceed its initial target for the year of reaching 34 million monthly active users, as its number hit about 33 million in May, he said.

Chen, speaking in a separate interview with Dow Jones Newswires, also said Renren will pursue investments and acquisitions more aggressively in one to two years, focusing on internal growth in the closer term. Possible acquisition targets in China include other social-networking services or makers of online or mobile applications with strong growth potential, he said.

Renren has no plans for aggressive expansion overseas in the near term, Chen said.

Renren said its net loss in the three months ended March 31 was $2.6 million, or 4 cents per American Depositary Share, compared with a year-earlier loss of $12.1 million, or 14 cents per ADS. Excluding share-based compensation and impairments in both periods, and a large negative adjustment on the fair value of its warrants in the year-earlier period, Renren swung to a $1.1 million net loss from a $645,000 net profit.

First-quarter revenue jumped 47% to $20.6 million from $14.0 million, as online advertising revenue doubled to $8.1 million from $4.1 million. Revenue from online value-added services such as games and Renren's group-based deal site Nuomi.com grew 25% to $12.4 million from $10.0 million.

For the second quarter, Renren projected revenue of $29 million to $30 million, which at the top end represents a 51% jump from a year earlier, it said without giving a year-earlier figure.

Renren's American Depositary Shares jumped 29% on their debut in May but sank back below their IPO price of $14 the next week. On Monday they were down 1.3% at $7.50 in after-hours trading.

Renren is similar to Facebook, but it has several major rivals in China and doesn't share Facebook's dominance. One of its main rivals, Kaixin001.com, is also preparing to list in the U.S., The Wall Street Journal reported in April.

Many newly public Chinese companies, like Renren, have seen their American Depositary Shares sink in recent weeks. Investors have grown more wary of Chinese companies as several are marred by questions over accounting and disclosure investigations. Investors have also begun to realize some Chinese companies, especially Internet-focused companies like Renren, face more competition and may not generate as much revenue growth as previously thought.

Just before listing in the U.S. in May, Renren reduced the user-base growth rate it gave in its IPO prospectus after observers questioned the figures, and the head of its audit committee resigned to spare Renren association with fraud allegations at another company of his.

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